Are Rare Earths that Rare: Mining Bokan Mountain in Alaska

Are rare earths that rare? Or are we just failing to mine them? Drive to Las Vegas from Los Angeles and just before you leave California to enter Nevada, you spy a large pit in a vast desert of rock and nothing. That is the Mountain Pass mine that could produce much of the rare earth the US needs, if only Californian environmental concerns, good for the lush coast, but not designed forthe stark desert, did not get in the way.

Then up to south tip of Southeast Alaska where exploration is underway at the Bokan Mine. This too could produce a goodly portion of US rare earth needs, but the fight over mining near the water is just beginning.

David Szumigala of the State of Alaska Department of Natural Resources talked at the Alaska Miners Association meeting in Juneau a few weeks ago of the abundance of rare earth deposits in Alaska. In the copy of his talk I retained, he lists 71 “Alaska rare-earth occurrences and anomalies.” This is a great document - I recommend you download and read it.

In today’s news we read this, a rare act by lawmakers to advance mining and commodity independence:

U.S. Rep. Mike Coffman, R-Colorado, Wednesday reintroduced the Rare Earths Supply-Chain Technology and Resources Transformation Act of 2011 (RESTART Act), which seeks to re-establish a domestic rare earth industry in the United States. Coffman’s comprehensive legislation will put in place mechanisms to help U.S. manufacturers meet their needs for rare earth metals and ensures U.S. national security needs are met in the near term. The legislation directs federal agencies to expedite their permitting processes in order to increase the exploration and development of domestic rare earth elements, without waiting environmental laws, and establishes a multi-agency task force to carry out this process.

It is good that there is legislative action to address a major gap in US mining and commodity supply that, left un-attended, could lead to disruptions, high costs, and national insecurity. For example Szumigala notes:

In 2010, the U.S. Government Accountability Office (GAO) assessed the likelihood of national security risks arising from the U.S.’s nearly 100 percent dependency on non-domestic sources for REEs. China, the primary source, cut its exports by 72 percent in 2010. The GAO report concluded U.S. defense systems will likely continue to depend heavily on REEs, on the basis of current technology and system designs utilizing REEs, and a lack of effective non-REE substitutes U.S. Government Accountability Office, 2010. The lack of a domestic REE supply chain presents national security concerns for the U.S., and diminishes its ability to be a world-technology leader. For example, a 2009 National Stockpile configuration report identified lack of lanthanum, cerium, europium, and gadolinium as having caused some kind of weapon system production delay.

Alaskans of mining bent are insistent that Federal obstruction is a major concern and a major impediment to opening new mines inthe state. – see this link for a sobering analysis, and this link for a letter from Alaska Governor Sean Parnell to Obama. Incidentally, the link is to the RareMetalBlog, a place to watch in this unfolding saga.

For the investor, the question is should you invest in rare earth metals, and if so which companies are best to invest in. I leave the answers to you to find, but please share ideas with us on this issue.